A/HRC/33/42. Advance edited version. Report of the Special Rapporteur on the rights of indigenous peoples *, **

Transcription

1 Advance edited version Distr.: General 11 August 2016 Original: English A/HRC/33/42 Human Rights Council Thirty-third session Agenda item 3 Promotion and protection of all human rights, civil, political, economic, social and cultural rights, including the right to development Report of the Special Rapporteur on the rights of indigenous peoples *, ** Note by the Secretariat The report transmitted herewith provides an analysis of the impacts of international investment agreements,including bilateral investment treaties and investment chapters of free trade agreements, on the rights of indigenous peoples. * The present document was submitted late so as to include the most up-to-date information possible. ** The annexes to the present report are reproduced in the language of submission only.

2 Report of the Special Rapporteur on the rights of indigenous peoples Contents Annexes I. Introduction... 3 II. Activities of the Special Rapporteur... 3 A. Country visits... 3 B. Report on environmental conservation measures... 3 III. International investment agreements... 3 A. Background... 3 B. Overview of international investment agreements... 4 IV. Indigenous peoples rights... 5 A. Overview... 5 B. Recognition and enforcement... 6 C. Business and indigenous peoples rights... 6 V. Impacts on indigenous peoples rights of investments, international investment agreements and investor-state disputesettlements... 7 A. Impact of investments on indigenous peoples... 7 B. Impacts of international investment agreements and investor-state dispute settlements... 8 C. Examples of investor-state dispute settlements involving indigenous peoples rights D. Observations on investor-state dispute settlements VI. Trans-Pacific Partnership VII. Conclusions and recommendations A. Conclusions B. Recommendations I. Participation in international and national conferences and dialogues II. Regional and global workshops on the impact of investment agreements and the rights of indigenous peoples III. Bibliography IV. Other ISDS cases impacting on indigenous peoples rights Page 2

3 I. Introduction 1. The present report is submitted to the Human Rights Council by the Special Rapporteur on the rights of indigenous peoples pursuant to Council resolutions 15/14 and 24/9. In the report, she provides a brief summary of her activities since her previous report (A/HRC/30/41) and offers a thematic analysis of the impact of international investment agreements on the rights of indigenous peoples. II. Activities of the Special Rapporteur A. Country visits 2. Since the thirtieth session of the Council, the Special Rapporteur carried out three official country visits to Lapland in August 2015, Honduras in November 2015 and Brazil in March 2016 the reports of which will be issued as addenda to the present report. B. Report on environmental conservation measures 3. The Special Rapporteur will present a thematic report on environmental conservation measures and their impact on indigenous peoples rights to the General Assembly at its seventy-first session. III. International investment agreements A. Background 4. In her 2015 report to the General Assembly (A/70/301),the Special Rapporteur concluded that the protections that international investment agreements provide to foreign investors can have significant impacts on indigenous peoples rights. In order to gain further insights into the issue she sent questionnaires to States Members of the United Nations, indigenous peoples and civil society organizations and, in cooperation with the International Work Group for Indigenous Affairs, the Asia Indigenous Peoples Pact, the Columbia Center on Sustainable Investment and the Indigenous Peoples International Centre for Policy Research and Education (Tebtebba), organized a series of regional and global consultations with indigenous peoples and experts in the area of international investment law and human rights. 5. This research indicates that there are significant impacts on indigenous peoples rights as a result of the international investment regime, in addition to the impacts of the investments themselves. These impacts are manifested in the subordination of those rights to investor protections, generally as a result of a phenomenon referred to as regulatory chill and serious deficiencies in the dispute resolution process instituted by the investment regime. 6. The present report is the second of three that the Rapporteur dedicates to this issue. She has previously introduced the topic and touched on some of the impacts of international investment agreements on indigenous peoples rights and the more systemic issues associated with the international investment law regime. In the present report,she seeks to further contextualize and examine those impacts by focusing on cases involving such 3

4 agreements and rights. In her final report,she will reflect on the standards of protections that those agreements afford and contextualize them in the light of developments in international human rights law and the sustainable development agenda as they pertain to indigenous peoples. 7. In doing so, the Special Rapporteur seeks to promote coherence in international investment law and international human rights law and ensure that State fulfilment of duties pertaining to indigenous peoples rights is not obstructed by protections afforded to investors. B. Overview of international investment agreements 8. The international investment regime consists of 3,268 international investment agreements, comprising almost 3,000 bilateral investment treaties and more than 300 investment chapters of bilateral or regional free trade agreements. 1 These agreements, between States, provide legal protections to investors of home States for their investments in host States. 9. International investment agreements tend to follow a standard format,with provisions on: prohibiting expropriation or regulatory taking without compensation; national treatment or non-discrimination, meaning that foreign investors are treated no less favourably than domestic investors; most favoured nation treatment, requiring the same standard of treatment available to other foreign investors; fair and equitable treatment, or minimum international standards of treatment, which can be very broad in scope, generally including protection of investors legitimate expectations ; 2 and full protection and security for investments. 10. International investment agreements also typically provide investors with access to an investor-state dispute settlement process, whereby investors can bring arbitration cases against a host State for alleged failures to protect their investments in accordance with the provisions in the agreements. There is generally no obligation to exhaust domestic remedies or appeals system, and minimal transparency or opportunities for third-party intervention. Awards are enforceable through the acquisition of a State s overseas assets, are not subject to any financial limitations and can run into billions of dollars. 11. According to the United Nations Conference on Trade and Development (UNCTAD), cancellations or alleged violations of contracts and revocation or denial of licences are among the most commonly challenged State actions,with approximately 30 per cent of all settlements relating to the extractive and energy industries, which account for most new investments. 3 The majority of such cases are taken against States with significant populations of indigenous peoples in whose territories the exploited mineral, energy or forest resources are located. 12. Recent years have seen a growing number of megaregionalfree trade agreements,with scopesthat extend far beyond trade to include investment and regulatory 1 See United Nations Conference on Trade and Development (UNCTAD), Recent trends in international investment agreements and investor-state disputes, International Investment Agreement Issues Note (February 2015), available from 2 See UNCTAD, Fair and Equitable Treatment, Series on Issues in International Investment Agreements II (New York, 2012), available from 3 See UNCTAD, Recent trends. 4

5 dimensions, essentially forming global economicstructuralagreements. The most recent is the Trans-Pacific Partnership. Its investment chapter, containing many of the standard provisions in the model bilateral investment treaty of the United States of America, is one of its most controversial features. It has been widely criticized, including by Special Rapporteurs, for limiting democratic space by effectively transferring public decisionmaking powers over economic, social and cultural governance to corporate actors. IV. Indigenous peoples rights A. Overview 13. Under international human rights law, indigenous peoples are recognized as peoples vested with the right to self-determination, as affirmed in the International Covenant on Civil and Political Rights,the International Covenant on Economic, Social and Cultural Rights and the International Convention on the Elimination of All Forms of Racial Discrimination, by virtue of which they are entitled to determine their own social, cultural and economic development. The rights affirmed under those treaties, which have been widely adopted, take on particular characteristics when interpreted in the light of indigenous peoples distinct realities, needs, worldviews and historical contexts and the jus cogens prohibition of racial discrimination. The United Nations Declaration on the Rights of Indigenous Peoples offers the clearest articulation and interpretation of those rights as they pertain to indigenous peoples. 14. This is reflected in the jurisprudence of the United Nations human rights treaty bodies, which instruct States to use the United Nations Declaration on the Rights of Indigenous Peopleswhen implementing their treaty obligations. The treaties have also been interpreted by national and regional courts and commissions in Latin America and Africa in the light of the provisions of the Declaration and the International Labour Organization (ILO)Indigenous and Tribal PeoplesConvention, 1989 (No. 169), indicating the universal applicability of those instruments and signalling the emergence of customary international law in the area of indigenous peoples rights. 15. The concept of indigenous peoples is not defined under international law. However, its generally accepted characteristics include: self-identification as an indigenous people; the existence of and desire to maintain a special relationship with ancestral territories; distinct social, economic or political systems from mainstream society, which may be reflected in language, culture, beliefs and customary law; and a historically nondominant position within society. This applies irrespective of State nomenclature. 16. Indigenous peoples territorial and property rights are suigeneris in nature, encompassing the territories and resources that they have traditionally owned, occupied or otherwise used or acquired, including the right to own, use, develop and control resources. Those collective rights exist irrespective of State titles and are premised on: their status as self-determining peoples entitled to the lands and resources necessary for their physical and cultural survival; their customary land tenure regimes; and long-term possession of ancestral territories. 17. Consequently, States are obliged to establish culturally appropriate mechanisms to enable the effective participation of indigenous peoples in all decision-making processes that directly affect their rights. To ensure this, international human rights law standards require good-faith consultations to obtain their free, prior and informed consent.this requirement applies prior to the enactment of legislative or administrative measures, the development of investment plans or the issuance of concessions, licences or permits for projects in or near their territories. 5

6 18. Human rights bodies have consequently clarified that economic growth or national development cannot be used as a basis for non-consensual infringements on the territorial and cultural rights of indigenous peoples. 4 This is reinforced by the ergaomnes nature of the right of all peoples to self-determination, the prohibition of racial discrimination and the fact that their protection is a matter of public interest. B. Recognition and enforcement 19. Indigenous peoples are among the most marginalized and discriminated against groups in the world. The international framework protecting their rights emerged largely in response to that reality. Significant advances have been made in some jurisdictions in relation to the recognition of their rights, in particular in Latin America, and varying degrees of recognition are afforded in the domestic regulatory frameworks of other countries. However, throughout much of Asia and Africa, the rights recognized as pertaining to groups that meet the characteristics of indigenous peoples under international law tend to fall short of those recognized under international human rights law standards and, in many cases, the international law category indigenous peoples is not officially recognized. 20. Even in countries where international human rights law standards have been incorporated into domestic law, further steps are necessary to adjust the law to fully meet these international standards and ensure their enforcement. The associated implementation gap between law and practice is often symptomatic of power imbalances between vulnerable indigenous peoples and powerful political elites who seek to benefit from exploitation of resources found in their territories. 21. This power imbalance is generally mirrored in the relationship between institutions established to protect indigenous peoples rights and those responsible for promoting and facilitating natural resource exploitation. Therefore, even in jurisdictions with advanced legal frameworks, deep-rooted structural discrimination and vested interests can render ineffective the legal protections afforded to indigenous peoples. C. Business and indigenous peoples rights 22. The Guiding Principles on Business and Human Rights affirm the independent corporate responsibility to respect indigenous peoples rights as recognized in international human rights law. This responsibility is bolstered by the incorporation of the Principles into standards, such as the Organization for Economic Cooperation and Development (OECD) Guidelines on Multinational Corporations. A growing body of standards exists in relation to investment that affects indigenous peoples lands,including performance standards of most international financial institutions, such as the International Finance Corporation, and apply to private banks that adhere to the Equator Principles, which require clients to respect indigenous peoples rights, including free, prior and informed consent. The World Bank has included the requirement for such consent in its draft revised policy. However, other banks, such as the African Development Bank and the Brazilian Development Bank, have yet to develop safeguard policies for indigenous peoples. 23. The standards of a growing number of multi-stakeholder initiatives include respect for indigenous peoples rights, as affirmed under the United Nations Declaration on the Rights of Indigenous Peoples, and consequently require free, prior and informed consent 4 See CCPR/C/52/D/511/

7 prior to approving or undertaking an investment. Some extractive industry bodies and companies sourcing palm oil, sugar, soy and other resources have also made policy progress towards the recognition of rights recognized in the Declaration,including the requirement for such consent, as has the United Nations Global Compact. Those developments reflect the general acknowledgement by transnational corporations of their responsibility to respect indigenous peoples rights. 24. However, implementation of those commitments remains poor, and issues remain surrounding the interpretation of indigenous peoples rights, in particular the right to give or withhold free, prior and informed consent. 25. Tackling the underlying issue of corporate participation in violations of indigenous peoples rights would contribute significantly to addressing the current imbalance and incoherence in international law. Mechanisms have been proposed to address business and human rights, such as arbitration tribunals dedicated to providing a remedy for affected peoples and individuals. Discussions at the intergovernmental level on a treaty on business and human rights have also raised many of the issues witnessed in the context of promoting investor obligations under international investment agreements. V. Impacts on indigenous peoples rights of investments, international investment agreements and investor-state dispute settlements A. Impact of investments on indigenous peoples 26. The Special Rapporteur s research reveals an alarming number of cases in the mining, oil and gas, hydroelectric and agribusiness sectors whereby foreign investment projects have resulted in serious violations of indigenous peoples land, self-governance and cultural rights. Those violations, which can extend to crimes against humanity, have been addressed extensively in the recommendations and jurisprudence of international and regional human rights bodies. 27. Typically, the host States involved employ economic development policies aimed at the exploitation of energy, mineral, land or other resources that are predominantly located in the territories of indigenous peoples. The government agencies responsible for implementing those policies regard such lands and resources as available for unhindered exploitation and actively promote them as such abroad to generate capital inflows. Recognition of indigenous peoples rights in the domestic legal framework is either nonexistent, inadequate or not enforced. Where they exist, institutions mandated to uphold indigenous peoples rights are politically weak, unaccountable or underfunded. Indigenous peoples lack access to remedies in home and host States and are forced to mobilize, leading to criminalization, violence and deaths. They experience profound human rights violations as a result of impacts on their lands, livelihoods, cultures, development options and governance structures, which, in some cases, threaten their very cultural and physical survival. Projects are stalled and there is a trend towards investor-state dispute settlementsrelated to fair and equitable treatment, full protection and security and expropriation. 28. Despite significant developments in the recognition of indigenous peoples rights and safeguards under international human rights law, investment in those sectors is 7

8 generating increasing and ever more widespread effects on indigenous peoples lives 5 as the legal vacuum arising from the lack of recognition or enforcement of their land rights facilitates arbitrary land expropriation, enabling national and local officials to make those lands available for investment projects. At the same time, the vast majority of those lands are protected under international investment agreements, and related investor-state dispute settlement disputes in agribusiness and extractive sectors are expected in Africa and Asia, while in Latin America there is a growing number of claimsconcerning settlements in relation to such activities in or near indigenous territories. 29. Special Rapporteurs, United Nations treaty bodies and the Inter-American Commission on Human Rightshave made numerous recommendations urging home States toadopt regulatory measures for companies domiciled in their jurisdictions aimed at preventing, sanctioning and remedying violations of indigenous peoples rights abroad for which those companies are responsible or in which they are complicit The Inter-American Commission on Human Rights has noted that addressing related jurisdictional issues may require negotiations between States during bilateral or other agreements and before foreign companies are accepted for business. B. Impacts of international investment agreements and investor-state dispute settlements 31. International investment agreements can have serious impacts on indigenous peoples rights as a result of three main interrelated issues: (a) the failure to adequately address human rights in the preambles and substantive provisions of such agreements; (b) the actual or perceived threat of enforcement of investor protections under investor- State dispute settlement arbitration, leading to regulatory chill; and (c) the exclusion of indigenous peoples from the drafting, negotiation and approval processes of agreements and from the settlement of disputes. 32. These potential impacts of international investment agreements must be considered in the light of the current inadequate recognition and lack of enforcement of indigenous peoples rights in domestic legal frameworks. Such agreements, and investor-state dispute settlements,tend to block necessary advances and developments in domestic legal frameworks as they relate to investment activity. They limit the State s will and freedom to impose and enforce human rights obligations on transnational corporations and to progressively realize human rights. By entrenching investor protections, they also entrench rights-denying aspects of extant legislative frameworks and contribute to preventing the needed reform from a human rights perspective. 33. International human rights law and international investment agreements play significant roles in governing the behaviour of host States in relation to resource extraction in or near indigenous peoples territories. Agreements serve to protect and regulate property rights of investors related to the exploitation or use of land and resources. Those rights can come into direct conflict with the pre-existing but not necessarily formally recognized and titled inherent customary law and possession-based property rights of indigenous peoples protected under international human rights law. 34. International human rights law recognizes that in certain contexts restrictions can be placed on indigenous peoples property rights. However, to be legitimate, such restrictions must be:(a) established by law; (b) necessary; (c) proportional to their purpose;and (d) non- 5 See A/HRC/24/41, para See A/HRC/24/41, para. 48, and CERD/CAN/CO/19-20, para

9 restrictive to the peoples survival. 7 It affirms that, in the context of indigenous peoples property rights, these conditions imply that good-faith consultations must be held to obtain free, prior and informed consent before any measures affecting those property rights can be considered legitimate. 35. Inadequate respect and protections for indigenous peoples land and free, prior and informed consent rights when granting rights to investors over their territories are the root causes for subsequent and broader violations of indigenous peoples rights. In such contexts,international investment agreementsthat fail to recognize international human rights law obligations contribute to the subordination of indigenous peoples rights to investor protections, as those protections become an obstacle to future recognition of indigenous peoples pre-existing rights. 36. In order to address the perverse situation that arises when indigenous peoples are prevented from realizing their land and resource rights owing to protections afforded to investors, a former Special Rapporteur has stressed: That resolving [indigenous peoples ] land rights issues should at all times take priority over commercial development. There needs to be recognition not only in law but also in practice of the prior right of traditional communities. The idea of prior right being granted to a mining or other business company rather than to a community that has held and cared for the land over generations must be stopped, as it brings the whole system of protection of human rights of indigenous peoples into disrepute International investment agreementsthat have facilitated and protected investments in indigenous territories are often accompanied by the deployment of military and private security services. The effects of this are a major concern in many jurisdictions, in particular those with histories of low-intensity conflict. As a result, under international human rights law, and as reflected in article 30 of the United Nations Declaration on the Rights of Indigenous Peoples, military activities should not take place in the lands or territories of indigenous peoples, unless justified by a relevant public interest or otherwise freely agreed to or requested by the indigenous peoples concerned. 9 However, such security presencesare effectively mandated under certain existing interpretations of the provisions of such agreements on full protection and security, leading to a direct conflict between international investment law and international human rights law. 38. In some cases,international investment agreements, and measures deemed necessary to facilitate their implementation, have triggered large-scale conflict and significant loss of life. On 1 January 1994, when the North American Free Trade Agreement came into effect and triggered privatization of indigenous peoples communal lands, the Zapatista National Liberation Army, composed of indigenous peoples from Chiapas, initiated an armed rebellion, calling the Agreement a death sentence for indigenous peoples. 39. Some 14 years later, the free trade agreement between the United States and Peru was used as a pretext for a series of neo-liberal legislative decrees, 10 of which had seriously negative implications for Amazonian indigenous peoples territorial rights. The refusal of the Government of Peru to accept proposals made by indigenous peoples triggered mobilization, resulting in the tragic deaths of 30 people when the military was deployed in response. 7 See Saramaka People v. Suriname,Inter-American Court of Human Rights (2007). 8 See E/CN.4/2003/90/Add.3, para. 67 (e). 9 See A/HRC/24/41/Add.3, para

10 40. Consideration of investor-state dispute settlement claims where indigenous peoples rights are involved affords the opportunity to assess the practices of tribunals, the arguments made by States and investors and the space available for indigenous peoples participation and the ways in which international investment agreements can come into conflict with international human rights law. C. Examples of investor-state dispute settlements involving indigenous peoples rights 41. In the International Centre for Settlement of Investment Disputes case Burlington Resources Inc. v. Ecuador (2010) 10 the oil and gascompany claimed that Ecuador had failed to meet its obligations to give its operations full protection and security against indigenous peoples opposition and at times violent protests. The State argued that the indigenous peoples actions had been a case of force majeure and did not address the issue of indigenous peoples rights in its defence. The security aspect of the claim was rejected on procedural grounds without addressing the indigenous rights issues.the case was also subject to parallel consideration by the Inter-American Commission on Human Rights and the Inter-American Court of Human Rights.In 2012,the Court ruled that the failure to consult the indigenous peoples and obtain their free, prior and informed consent, and the use of force by the State, had put the indigenous peoples survival at risk In Chevron v. Ecuador (2014), the company took a series of arbitration cases to avoid paying damages awarded by Ecuadorian courts in The $8.6 billion award followed a class action suit addressing harms suffered by indigenous peoples as a result of environmental contamination. The case demonstrates the extremely broad and potentially indigenous rights-denying interpretation of investment as including a lawsuit in domestic courts and payments to affected people arising from the lack of remediation. Precautionary measures were subsequently sought from the Inter-American Commission on Human Rights seeking to prevent any action arising from the investor-state dispute settlement award that would contravene, undermine, or threaten the human rights of the concerned indigenous communities. 43. In Von Pezold and Border Timbers v. Zimbabwe (2015),the company claimed expropriation under the bilateral investment treaties between Germany and Zimbabwe and between Switzerland and Zimbabwe in the context of the State s taking of land. Four indigenous communities, whose traditional lands were the subject of proceedings, submitted an amicus submission claiming that the State and the company had human rights obligations towards them. In its preliminary order of June 2012, the International Centre for Settlement of Investment Disputes tribunal acknowledged their claims to the lands and that its determinations may well have an impact on the interests of the indigenous communities. However, the tribunal rejected their amicus submission on the grounds that:(a) the communities and their chiefs lacked independence, as they were associated with people affiliated to the Government, and therefore the claimants may be unfairly prejudiced by their participation; (b) it was not in a position to decide if they were indigenous or not and lacked the competence to interpret indigenous peoples rights; (c) it was not persuaded that consideration of international human rights law obligations, including, article 26 of the United Nations Declaration on the Rights of Indigenous Peopleswas part of its mandate, and rules of general international law did not necessarily extend to international human rights law; and (d) neither the State nor the company had raised indigenous rights issues. It 10 Burlington Resources Inc. v. Ecuador Decision on Jurisdiction (2010). 11 Sarayaku v. Ecuador,Inter-American Court of Human Rights (2012). 10

11 concluded that the putative rights of the indigenous communities as indigenous peoples under international human rights law was a matter outside of the scope of the dispute. 44. In Glamis Gold v. United States (2009), an arbitration panel found against the company,which had been refused access to a sacred area of the Quechan tribal nation. The decision hinged on the tribunal s position that its role was to assess if the customary international law standard of fair and equitable treatment had been breached and not to assess if the State had fairly balanced the competing rights of the Quechan nation and the company. It held that the State had been justified in relying upon the opinion of the professionals it had engaged and that, as the investor s expectations had not been induced by the State in a quasi-contractual manner, they did not trigger a treaty breach. The decision also pointed to the significance of the highly regulated environment in California with respect to environmental measures in general and mineral exploration in particular, which should have tempered the investor s expectations. The tribunal accepted the Quechan amicus submission but did not engage with its argument that international human rights law as it pertained to indigenous peoples was applicable in the case. 45. In Grand River Enterprise Six Nations, Ltd. v.the United States(2011), a tobacco company owned by members of the Canadian Haudenosaunee nations challenged measure taken by the United States. One of the issues raised by the company was the absence of prior consultation in relation to some of the measures. While finding that no expropriation had occurred, the tribunal stated that it may well be that there does exist a principle of customary international law requiring governmental authorities to consult indigenous peoples as collectivities on governmental policies or actions significantly affecting them. As the enterprise was owned by individuals, the tribunal held that it did not have to address the issue of prior consultation. It did, however, add that a good case could be made that consultations should have occurred with governments of the native American tribes or nations in the United States, whose members and sovereign interests could, and apparently are, being affected by the measures to regulate commerce in tobacco In the Permanent Court of Arbitration casesouth American Silver Mining v.the Plurinational State of Bolivia, the company is seeking $387 million for the alleged expropriation of 10 mining concessions and violations of fair and equitable treatment, pursuant to the bilateral investment treaty between the United Kingdom of Great Britain and Northern Ireland and the Plurinational State of Bolivia. The company holds that it made legitimate efforts with the communities to achieve an overall consent and that opposition to the project is from a small group of illegal miners and certain indigenous organizations, with the Government fomenting conflict. It argues that the communities have repeatedly requested it to move forward with the project,and alleges that the Plurinational State ofbolivia failed to provide full protection and security, noting its patently unreasonable decision not to prosecute indigenous leaders, given the implications for its investment The Plurinational State ofbolivia responded that: (a) it had acted in the public interest and had been justified in reverting ownership to the State in accordance with the principles of proportionality and necessity, to avoid security concerns arising out of indigenous peoples opposition to the project and to restore public order; (b) it was enforcing domestic legislation that should have tempered the company s legitimate expectations, as the State made no commitment to stability; (c) the project violates rights recognized in the United Nations Declaration on the Rights of Indigenous Peoples; (d) the company had attempted to fabricate consent in total disregard for the right to self- 12 See Grand River Enterprises Six Nations, Ltd. v. United States, paras.210 and 212, available from 13 See notice of arbitration and claimant s reply, available from 11

12 government of the concerned indigenous peoples; (e) the bilateral investment treaty had no applicable law clause, so there should be systemic interpretation in accordance with article 31 (3) (c) of the Vienna Convention on the law of treaties, including human rights obligations towards indigenous peoples under national and international law, as this would be consistent with the evolving nature of standards around fair and equitable treatment, full protection and security, arbitrariness and expropriation; and (f) customary international law recognizes the primacy of human rights over investor protections, citing the ruling of the Inter-American Court of Human Rights in Sawhoyamaxa v. Paraguay and Article 103 of the Charter of the United Nations In response,the company contends that: (a) the State failed to show how the systemic interpretation would result in having to degrade the protections granted to the company under the treaty to uphold the putative rights of indigenous communities under international law; (b) the United Nations Declaration on the Rights of Indigenous Peoples, OECD Guidelines and the Guiding Principles on Business and Human Rights are non-binding instruments, while the ILO Indigenous and Tribal Peoples Convention, 1989 (No. 169), the Inter-American Commission on Human Rights and the jurisprudence of the Inter-American Court of Human Rights are not binding on the United Kingdom, and consequently they are not rules of international law applicable to relations between the parties; (d) the State failed to demonstrate that protection of indigenous peoples rights had advanced to the level of ergaomnes obligations or why human rights trump investor protections. 49. The company invoked the view of Canada in Grand River Enterprise Six Nations, Ltd. v. the United States(see para. 48) that the ILO Indigenous and Tribal Peoples Convention, 1989 (No. 169) and the United Nations Declaration on the Rights of Indigenous Peoples do not form part of customary international law, and the decisions of previous tribunals in Glamis Gold v. United States (see para. 47) not to rule on the applicability of indigenous rights and in Von Pezold and Border Timbers v. Zimbabwe(see para. 46) that indigenous rights do not fall under the scope of bilateral investment treaties. The company holds that an exception maintaining preference for indigenous peoples rights over investor protections would be necessary to degrade investor protections and points to the standard Maori exception employed in the bilateral investment treaties of New Zealand as evidence of this In the International Centre for Settlement of Investment Disputes case Bear Creek Mining Corp. v. Peru, the company is claiming over $500 million for alleged indirect expropriation, lack of fair and equitable treatment, discrimination and lack of full protection and security for its presumptive mining rights at the Santa Ana concession, under the free trade agreement between Peru and Canada. The claim was made following indigenous peoples protests, which gave rise to the withdrawal of its mining concession. 51. According to the company, the protests, some of which turned violent, were politically motivated involving an anti-foreign and anti-mining movement that gained support from the Aymara indigenous people. It claims that, rather than assess the social and environmental conditions, the Government of Peru acted out of political expediency and capitulated to extreme violence. The company states that it intended to comply with environmental permitting and corporate social responsibility and had consulted the 14 See claimant s reply to respondent s counter-memorial, available from 15 Ibid. 12

13 indigenous communities that supported the project and that would benefit significantly as a result of employment and revenues The State s response addressed the nature of the investment, the necessity of its actions and the absence of adequate consultation and free, prior and informed consent. It argued that the project had not constituted an investment as permissions to proceed were still pending, including the approval of the environmental social impact assessment. Consequently,the company had never held rights to mine. The indigenous peoples protests had paralyzed major cities in Puno, Peru, for more than a month and the violent social unrest had been due to deep-rooted indigenous community opposition to mining activities and not, as the company alleged, puppet shows staged by politicians or political theatre. It states that the revocation of the concession had therefore been a nondiscriminatory and necessary exercise of its police powers aimed at guaranteeing public safety Addressing the consultation and consent requirements,the State argues that the company had been responsible for engaging with and learning the concerns of the indigenous peoples affected by the project but had failed to consult with and obtain the consent of all the affected indigenous peoples and communities,as it had been required to do under relevant international human rights law standards, Peruvian law, practices recommended by the Government of Canada and the International Council on Mining and Metals guidelines. In that regard, it argues that Peruvian law serves to implement the ILO Indigenous and Tribal Peoples Convention, 1989 (No. 169), which requires prior consultation and in practice is a consent requirement. It states that it was incumbent on the company not only to go through the motions of consulting with affected indigenous communities, and that it must in fact obtain prior approval as, without that approval or consent, the project cannot succeed. It also states that the company would not have obtained consent had the months of violent protests in opposition to it been predicted. Instead, the company s support had come from a handful of communities in the area of influence of the project and not from the neighbouring communities that would also be affected by the project and who opposed it. This selective and divisive approach to consultation served to fuel discontent and conflict with cross border implications The Colombia Centre on Sustainable Investment submitted anapplicationto file awritten submission in the case, but was denied by the tribunal. 19 The amicus submission had pointed to the inconsistency between the investor s understanding of what is meant by an investment and the definition in the free trade agreement.furthermore, it had raised the consequent non-applicability of the fair and equitable treatment standard and the failure to demonstrate legitimate expectations, even if that standard had been applied. Similarly, it had pointed to the central role that the requirement to seek and obtain free, prior and informed consent should play in the assessment of the facts and the determination of the award, and the urgency of ensuring compliance with this requirement, in the light of the extensive mining-related social conflict throughout Peru. According to the submission, providing compensation to the company would be equivalent to granting it a right to exploitation and would disregard indigenous peoples rights. 16 See claimant s memorial on the merits, available from cases/pages/casedetail.aspx?caseno=arb/14/21&tab=doc. 17 See respondent s counter-memorial on the merits and memorial on jurisdiction, available from 18 Ibid. 19 See 13

14 D. Observations on investor-state dispute settlements 55. A number of observations can be made with regard to the above cases. Firstly, in all of the cases where an award was issued, international human rights law as it pertains to indigenous peoples rights was not considered a source of applicable law. With the exception of Glamis Gold v. United States, indigenous peoples rights and interests were effectively ignored by tribunals and considered immaterial to proceedings, despite the fact that violations of their rights and efforts to assert them had been core issues underpinning the disputes in question, and the decisions could have had potentially profound impacts on their rights and well-being. 56. The decision in that case is regarded as forward-looking in terms of ensuring respect for the protection of indigenous peoples sacred spaces and demonstrating that awards can be sensitive to and inclusive of indigenous peoples issues. The tribunal s decision that a 50 per cent reduction in the projected earnings, arising from a measure aimed at protecting indigenous peoples sacred places, did not constitute indirect expropriation and that the measures did not constitute a manifestly arbitrary denial of justice, supports this view. 57. However, the tribunal essentially ignored the position articulated in the Quechan nation amicus submission that international human rights law as it pertained to the rights arising in the case should be considered applicable law. A related critique is that the tribunal relied heavily on the robust legislative history in California relating to the environment in the determination of what constituted an investor s legitimate expectation, thereby setting a dangerous precedent in jurisdictions that do not have such a history. 58. How a tribunal would respond to such an argument is unknown. An alternative argument could be that, in States where the rule of law is weak, legislative reform to respect human rights is inevitable once the political environment matures sufficiently. As State obligations in relation to indigenous peoples exist under international human rights law, a reasonable investor should expect that they will eventually be implemented, as any expectation that they will not is blatantly unjust and lacks legitimacy. A clearer position on behalf of the tribunal, that a State maintains the right to regulate in order to protect its indigenous peoples rights, as recognized under international human rights law, would have avoided this ambiguity. 59. One reason provided for the failure of tribunals to address indigenous rights was the State s failure to raise human rights issues in its arguments, a view also expressed by tribunals in other cases. This contrasts with the pending cases of Bear Creek Mining Corp. v. Peru andsouth American Silver Mining v. the Plurinational State of Bolivia, in which the States place significant emphasis on indigenous peoples rights, in particular consultation and free, prior and informed consent rights, as meriting consideration by the tribunals. This development points to a potential synergy between affording protection to indigenous peoples rights in domestic regulation and international investment agreements and reducing the risk of potentially costly lawsuits in the context of measures affecting investor protections. 60. These cases also raise important issues regarding corporate and State responsibilities in relation to consultations seeking to establish the free, prior and informed consentof indigenous peoples, and the relationship that such consent has in establishing an investment over which an investor can claim protection. In doing so, the cases give tribunals an opportunity to address an issue of fundamental importance to indigenous peoples rights and to ensuring greater coherence between the international investment law and international human rights law. An overarching issue that arises relates to the role of corporate human rights due diligence in determining legitimate expectations in contexts where social conflict and rights violations appear inevitable in the absence of free, prior and informed consent. 14

15 61. The cases also illustrate the frequent tensions that arise between the international human rights law and international investment law regimes. In Burlington Resources Inc. v. Ecuador, the contrast is striking between the findings of the Inter-American Court of Human Rights that the State used unnecessary and excessive force against the indigenous peoples,thereby threatening their existence, and the claim by the company involved in the investor-state dispute settlement that the State had not used sufficient force to protect its investment from those indigenous peoples, with neither the company nor the State seeing fit to address indigenous peoples rights in their arguments. 62. The number of investor-state dispute settlement cases involving indigenous peoples rights is growing, a fact that could be related to the speculative nature of such settlements, which encourages investors, in particular risk-taking extractive companies, to seek ever broader interpretations of the protections surrounding international investment agreements. Similarly, the expectation among risk-adverse States that the trend will continue reduces the probability that States will take urgently needed measures to recognize, protect, respect and fulfil indigenous peoples rights, including by addressing historical injustices in relation to land claims. 63. The Inter-American Court of Human Rights decision in Sawhoyamaxa indigenous community v. Paraguay is illustrative of this. 20 The State argued that it could not implement land restitution programmes aimed at guaranteeing indigenous peoples rights because of protections afforded to investors under its bilateral investment treaty with Germany. The Court ruled that the treaty had to be interpreted in the light of the State s human rights obligations and that the taking of land for restitution to indigenous people could be justified as a public purpose or interest. While it is one of the few cases that has attempted to reconcile obligations under international investment law and international human rights law,it offers no guidance on the extent to which the investor should be compensated or what considerations should determine when compensation is or is not required. This points to the need for further guidance from human rights bodies on these matters. 64. The limited and inconsistent role that tribunals attribute in their deliberations to amicus submissions of indigenous peoples also emerges from the cases. The basis in Von Pezold and Border Timbers v. Zimbabwe for rejecting the amicus submission raises a number of profound concerns should it guide future tribunals, as South American Silver suggests it should. 65. The notion that indigenous peoples must demonstrate independence from the State in relation to matters pertaining to their rights is inconsistent with the State s role as the duty-bearer in relation to those rights. Equally alarming, and contrary to international human rights law, is the tribunal s dismissal of the fundamental role of self-identification in the determination of what constitutes an indigenous people. 66. The tribunal essentially distanced itself from any damage that its decision could have on indigenous rights, acknowledging that its ruling could affect those rights but holding that they were outside the scope of the dispute and not part of the applicable law. This amounts to the subordination of indigenous peoples rights to investor protections, with no option provided for participation or appeal. Such arguments go to the core of the legitimacy crisis that the international investment law system is facing. Justifications based on a lack of competence in relation to indigenous rights are further evidence of the system s deficiencies. 67. All of the above reflects the fact that, at its core, the investor-state dispute settlement system is adversarial and based on private law, in which affected third-party 20 See 15